zuwari cement

7/28/2019 Zuwari Cement

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Fixed Assets Management Zuari Cement Ltd

1.INTRODUCTION

Financial management is the managerial activity which is concerned with the

planning and controlling of the firms financial resources. Financial management is the

procurement funds and establishes utilization of funds.

There are so many definitions for financial management, one of the important

definition is finance is the art and science of managing money.

Finance may be defined as the provision of money at the time where, it is required.

Finance refers to the management flows of money through an organization. It concerns with

the application of skills in the use and control of money. Different authorities haveinterpreted the term Finance differently. However there are three main approaches to

finance.

The first approach views finance as to providing of funds needed by a business on

most suitable terms. This approach confines finances to the raising of funds and to the study

of financial institutions and instruments from where funds can be procured.

The second approach relates finance to cash.

The third approach views finance is being concerned with rising of funds and their effective

utilization.

1.1. Definition of Financial Management:

Financial Management as practice by corporate firms can be called corporation

finance or business finance, Financial Management refers to that part of the management

activity, which is concerned with the planning & controlling of firms financial resources. It

deals with finding out various sources for raising funds for the firm. The sources must be

suitable and economical for the needs of the business. The most appropriate use of such

funds also forms a part of Financial Management.

SREC, NANDYAL Page 1


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2. NEED AND SCOPE FOR THE STUDY

2.1.NEED FOR THE STUDY

As fixed assets play an important role in companys objectives. These fixed are not

convertible or not liquidable over a period of time. The owners funds and long term

liabilities are invested in fixed assets. Since, fixed assets play dominant role in the business

and the firm has utilization of fixed assets. So, ratio contributes in analyzing and evaluating

the performance of the business.

If firms fixed assets are idle and not utilized properly it affects the long-term

sustainability of the firm, which may affect liquidity and solvency and profitability positions

of the company. The idle of fixed assets leads to a tremendous loss in financial cost and

intangible cost associate of it. So, this will lead to evaluation of fixed assets performance.

Comparing with similar company and comparison with industry standards.

2.2.SCOPE OF THE STUDY

The project is covered of Fixed Assets of ZUARI CEMENT drawn from Annual

Report of the company. The fixed assets considered in the project are which cannot beconverted into cash with one year. Ratio analysis is used for evaluating fixed assets

performance of ZUARI CEMENT INDUSTRIES.

The subject matter is limited to fixed assets it analysis and its performance but not any

other areas of accounting, corporate, marketing and financial matters.



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3.Objective of Financial Management:

Financial Management is concerned with procurement and use of funds. Its main aim

is to use business funds in such a way that the firms value / earning are maximized there are

various alternatives available for using business funds. The pros & cons of various decisions

have to look into before making a final selection. Financial Management provides a

framework for selecting a proper cause if action and deciding available commercial strategy.

The main objective of the business is to maximize the owner economic welfare. These

objectives can be achieved by

Profit Maximization

&

Wealth Maximization

Financial goal of the firm should be share holders wealth maximization as reselected

in the market value of the firm shares. It will come through profit maximization.

Profit maximization implies that a firm either produces maximum output for a given amount

of input, or uses minimum input for producing a given output.Shareholderswealth

maximization means maximizing the net present value of a course of action to shareholders.

3.1 OBJECTIVES OF THE STUDY:

The study is conducted to evaluate fixed assets performance of ZUARI CEMENT.

The study is conducted to evaluate the fixed assets turnover of ZUARI CEMENT

INDUSTRIES.

The study is made to know the amount of capital expenditure made by the company

during study period.

The study is conducted to evaluate depreciation and method of depreciation adopted

by ZUARI CEMENT INDUSTRIES.

The study is conducted to know the amount of finance made by long-term liabilities

and owner funds towards fixed assets.



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4.RESEARCH METHODOLOGY

Data sources:

Primary Data:

The data used for analysis and interpretation from annual reports of the company that

is secondary forms of data. Ratio analysis is used for calculation purpose.

The project is presented by using tables, graphs and with their interpretations. No

survey is undertaken (or) observation study is conducted in evaluating Fixed Assets

performance of ZUARI CEMENT INDUSTRIES.

Secondary Data:

The data gathering method is adopted purely from secondary sources.

The theoretical con tent is gathered from eminent texts books and reference and

library at Zuari Cement Industries.

The Financial data and information is gathered from annual reports of the company

internal records.

Interpretation, Conclusions and Suggestions are purely based on my opinion and

suggestions provided by the project guide.



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Tools and techniques:

The tools used in data analysis are two they are

1. Trend percentages

2. Ratio analysis

Trend percentages:

In Financial Analysis the direction of changes over a period of years is of initial

importance. Time series or trend analyses of ratios are the indicators of the direction of

change. This kind of analysis is particularly applicable to the items of profit and loss

account. It is advisable that trends of sales and net income may be studies in the light of two

factors. The rate of fixed assets expansion or secular trend in the growth of the business and

the general price level. It might be found in practice that a number of firms would be shown

price level. It might be found in practice that a number of firms would be shown a persistent

growth over period of years. But to get a true trend of growth, the sales figure should be

adjusted by a suitable index of general prices. In other words, sales figures should be

deflated for rising price level. Another method of securing trend of growth and one which

can be used instead of the adjusted sales figure or as check on them is to tabulate and plot the

output or physical volume of the sales expressed in suitable units of measure. If the general

price level is not considered while analyzing trend of growth, it can be mislead the

management so they may become unduly optimistic in period of prosperity and pessimistic in

dual periods.

For trend analysis, the use of index numbers is generally advocated the procedure

followed is to assign the numbers 100 to items of the base year and at calculate percentage

change in each items of other years in relation to the base year. The procedure may be called

as fixed percentage method

This margin determines the direction of upward or downward and involves the

implementation of the percentage relationship of the each statement item means to the same

in the base year. Generally the first year is taken as the base year.



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The figures of the base year are taken as 100 and trend ratios the other year are calculated on

the basis of one year. Here an attempt is made to know the growth of total investment and

fixed assets of Zuari Cement Industries for Five years that is 2009-2010 to 20012-2013

Ratio analysis:

Ratio Analysis is a powerful tool of financial analysis. A ratio is defined as

The indicated quotient of two mathematical expression and as The relationship between

for evaluating the financial position and performance of a firm.The absolute accounting

figure reported in financial statement do not private a meaningful understanding of the

performance and financial position of a firm. An accounting figure conveys meaning when it

is related to some other relevant information. Ratios help to summarize large quantities of

financial data to make qualitative judgment about the firms financial performance.

IMPORTANCE OF THE STUDY

Fixed Assets are the assets, which cannot be liquidates into cash within one year.

The large amount of the company is invested in these assets. Every year the company

investment is an additional fund in these assets directly or indirectly the survival and other

objectives of the company purely depend on operating performance of management in

effective utilization of their assets.

5.LIMITATIONS OF THE STUDY

The study is limited up to the date and information provided by Zuari Cement and is

annual reports.

The report will not provide exact Fixed Assets status and position in Zuari Cement; it

may vary from time to time and situation to situation.

This report is not helpful in investing in Zuari Cement Industries either through

disinvestments or capital market.

The accounting procedure and other accounting principles are limited by the company

changes in them may vary the fixed assets performance.



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REVIEW OF LITERATURE

FIXED ASSETS MANAGEMENT:

The selection of various fixed assets required creating the desired production facilities and

the decision regards the determination of the level of fixed assets is primarily the task that at

the production technical people. The decision relating to fixed assets involves huge funds a

long period of time is generally irreversible nature affecting the long term profitability of a

concern, an unsound investment decision may prove to be total to the very existence of the

organization. Thus, the management of fixed asset is of vital importance to any organization.

The process of fixed asset management involves:

Selection of most worthy projects or alternative of fixed assets.

Arranging the requisite funds / capital for the same.

The first important consideration to be acquire only that much amount of fixed assets which

will be just sufficient to ensure and efficient running of the business. In some cases it may be

economical to buy certain assets in a lot size. Another important consideration to be kept in

mind is possible increase in demand of the firms product necessarily expansion of its

activities. Hence a firm should have that much amount of fixed assets, which could adjust to

increase demand.

The third of fixed assets management is that a firm must ensure buffer stocks of

certain essential equipment / services to ensure uninterrupted production in these events of

emergencies. Sometime, there may be a breakdown in some equipment or services affectingthe entire production. It is always better to have some alternative arrangements to deal with

such situations. But at

the same time the cost of carrying such buffer stock should also be evaluated. Efforts should

also be made to minimize the level of buffer stock of fixed assets be encouraging their

maximum utilization during learn period, transferring a part of peak period and living

additional capacity.



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FIXED ASSETS:

Fixed assets are those, which are required and held permanently for a pretty longtime in

the business and are used for the purpose of earning profits. This successful continuance of

the business depends upon the maintenance of such assets. They are not meant for release in

the ordinary course or business and the utility of these remains so long as they are in working

order, so they are also know as capital assets. Land and building, plant and machinery, motor

vans, furniture and fixture are some examples of these assets.

Financial transactions are recorded in the book keeping in view the going concern aspect of

their business unit. It is assumed the business unit has a reasonable expectation of continuing

business at a profit for indefinite period of time. It will continue to operate in the future.

This assumption provides much of the justification for recoding fixed assets at original cost

and depreciating them in a systematic manner without reference to their current realizable

value. It is useless to show fixed assets in the balance sheet at their estimated realizable

values if there is no immediate expectation of selling them. Fixed resale, so they are shown attheir book values (i.e., cost less depreciation provided) and not at their current realizable

values.

The market value of a fixed asset may change with the passage of time, but for accounting

purpose it continues to be shown in the books at its book value, i.e., the cost at which it was

purchased minus depreciation proved up to date.

The cost concept of accounting, depreciation calculated on the basis of historical costs

of old assets is usually lower than that of those calculated at current value or replacement

value. These results in more profits on paper, which if distributed in full, will lead to

reduction of capital.



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NEED FOR VALUATION OF FIXED ASSETS:

Valuation of fixed assets is important in order to have fair measure of profit or loss

and financial position of the concern.

Fixed assets are meant for use for many years. The value of these assets decreases with their

use or with time or for other reasons. A portion of fixed assets reduced by use is converted

into cash though charging depreciation. For correct measurement of income proper

measurement of depreciation is essential, as depreciation constitutes a part of the total cost of

production.

ASSETS:

Assets may be described as valuable resources owned by a business, which were acquired at a

measurable money cost. As an economic resource, they satisfy three requirements. In the first place,

the resource must be valuable. A resource is valuable if (i) it is cash / convertible into cash; or (ii) it

can provide future benefits to the operations of the firm. Secondly, the resource must be owned. Mere

possession or control of a resource would not constitute an asset; it must be owned in the legal sense

of term.

Finally, the resource must be acquired at a measureable money cost. In case where an asset is not

acquired for cash/promise to pay cash, the test is what it would have cost had cash been paid for it?

Assets have three essential characteristics;

They embody a future benefit that involves a capacity, singly or in combination with other assets, In

the case of profit oriented enterprises, to contribute directly or indirectly to future net cash flows, and

in the case of nonprofit organizations, to provide services:



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The entity can control access to the benefit; and,

The transaction or event giving rise to the entitys right to, or control of, the benefit has already

occurred. It is not necessary; in the financial accounting sense of the term, for control of access to the

benefit to be legally enforceable for a resource to be an asset, provided the entity can control its use

by other means.

It is important to understand that in an accounting sense an asset is not the same as

ownership. In accounting, ownership is described by the term equity plus liability.

The accounting equation relates assets, liability, and owners equity:

Assets =Liability+ Owners Equity is the mathematical structure of the balance sheet.

Assets are usually listed on the balance sheet. It has a normal balance sheet. Asset has recorded in

debit side of asset account. (I.e. asset account amount appear on the left side of a ledger).

Similarly, in economics an asset is any form in which wealth can be held. Probably the most

accepted accounting definition of asset is the one used by the International Accounting Standards

Board. The following is a quotation from the IFRS Framework; An asset is a

Resource controlled by the enterprise as a result of past events and from which future economic

benefits are expected to flow to the enterprise.

Assets are formally controlled and managed within larger organization via the use of asset tracking

tools. These monitor the purchasing, upgrading, servicing licensing and disposal etc., of both physical

and non physical assets.

The assets in the balance sheet are listed either in order of liquidity promptness with which they are

expected to be converted into cash or in reserve order, that is, fixity or listing of the least liquid (fixed)

first followed by others. All assets are grouped into categories, that is, assets with similar

characteristics are put in one category. The assets included in one category are different from those in

other categories. The standard classification of assets divides them into

(1) Fixed assets,



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(2) Current assets,

(3) Investments, and

(4) Other assets.

Tangible fixed assets: are those, which have physical existence and generate goods and services.

Included in this category are land, building, plants, machinery, furniture, and so on. They are shown

in the balance sheet, in accordance with the cost concept, at their cost to the firm at the time they were

purchased. Their cost is allocated to /charged against/spread over their useful life. The yearly charge

is referred to as depreciation. As a result, the amount

Of such assets shown in the balance sheet every year declines to the extent of amount of depreciation

charged in that year and by the end of the useful life of the asset it equals the salvage value, if any.

Salvage value signifies the amount realized by the sale of the discarded asset at the end of its useful

life.

Intangible assets:do not generate goods and services directly. In a way, they reflect the rights of the

firm. This category of assets comprises patents, copyrights, trademarks and goodwill. They confer

certain exclusive rights to their owners. Patents confer exclusive rights to use an invention, copyrights

relates to production and sale of literary, musical and artistic works, trademarks represent exclusive

right to use certain names , symbols,labels,designs and so on .intangible fixed assets are also writtenoff over period of time.

Intangible fixed assets lack of physical substance and arise from a right granted by the

government or another company. Intangibles may be acquired or developed internally. Examples of

rights granted by the government are patents, copyrights and trademarks. While an example of a

privilege granted by another company is a franchise. Other types of intangibles include organization

costs, leasehold improvements, and goodwill. Organization costs are the expenditure incurred in

starting a new company. An example would be legal fees. Leasehold improvements are expenditures

made by a tenant to his or her leased property, such as the cost of putting up paneling. Goodwill

represents the amount paid.

For another business excess of the fair market value of its tangible net assets. For example, if a

company paid $1000000 for a company Bs net assets having a fair market value of $ 84000, the

amount paid for goodwill is $ 16000. Goodwill can be recorded only when a company purchases

another business. The amount paid for the goodwill of a business may be based upon the acquired



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firms excess earnings over other companies in the industry. Internally developed goodwill (e.g.,

good customer relations) is not recorded in the accounts.



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ACCOUNTING FOR INTANGIBLE ASSETS:

APB Opinion 17 specifies the requirements for accounting for intangible assets. Intangible

that has been acquired, such as good will, should be recorded at cost. In the event that an intangible is

acquired for other than cash, it should be reflected at either the fair market value of the consideration

given or the fair market value of the right received, whichever is more clearly evident. Intangibles

should not be arbitrarily written off if they still have values.

When identifiable intangibles are internally developed (e.g., patents), they should be recorded

as assets and reflected at cost. If they are not identifiable, they should be expensed.

Intangible assets must be amortized over the period benefited not to exceed 40 years.

Amortization is a term used to describe the systematic write-off to expense of an intangible assets

cost over its economic life. The straight-line method of amortization is used. The amortization entry is

Amortization expense - Dr

To Intangible asset

The credit is made directly to the given intangible asset account. However, it would not be

incorrect to credit an accumulated amortization account, if desired.

Some intangibles have a limited legal life. An example is patents, which have a legal life of 17 years.

DEFERRED CHARGES:

Deferred charges are of a long-term, nonrecurring nature. They are allocated to a number of future

periods. Examples are start-up costs and plant rearrangement costs.

Deferred charges are customarily listed as the least asset category in the balance sheet since their

dollar value is usually insignificant relative to total assets.



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OTHER ASSETS:

When noncurrent assets cannot be properly placed into the asset classifications already discussed,

they may be included in the Other Assets category. Placement of an item in this classification depends

upon its nature and dollar magnitude. However, this classification should be used as a last resort.

COLLECTIBLE ASSETS:

Not surprisingly, periodic disenchantment with returns on marketable securities has led some

investors to examine a host of tangible assets that are normally considered only by collectors. The

average returns on collectibles such as Chinese ceramics, coins, diamonds, paintings, and stamps have

on occasion been quite high, but generally such assets also experience periods of negative returns.

This fluctuation is not surprising because if one (or more) type of collectible had provided

consistently high returns, many investors would have been attracted to it and would have bid its price

up to a level where high returns would no longer have been possible. Indeed, more recent studies of

prints and paintings have concluded that their risk and return characteristics make them relatively

unattractive investments for risk-averse investors.

In a sense, a collectible asset often provides income to the owner in the form of consumption.

For example, an investor can admire a Roberto Clementre rookie baseball Card, sit on a Chippendale

chair, gaze upon a Georgia O Keefe painting, play a Stradivarius violin, and derive a Stutz Bearcat

automobile. Value received in this manner is not subject to income taxation and is thus likely to be

especially attractive for those in high tax brackets. However, the value of such consumption depends

strongly on ones preferences.

If markets are efficient, collectible assets will be priced so that those who enjoy them most

will find it desirable to hold them in greater than-market-value proportions, whereas those who enjoy

them least will find it desirable to hold them in less-than-market-value proportions (or, in many cases,

not at all).

Institutional funds and investment pools have been organized to own collectibles of one type

or another. These arrangements are subject to serious question if they involve locking such objects invaults where they cannot be seen by those who derive pleasure from this sort of consumption. On the



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other hand, if the items are rented to others, the only loss may be that associated with the transfer of a

portion of the consumption value to the government in the form of a tax on income.

Investors in collectibles should be aware of two especially notable types of risk. The first is

that the bid-ask spread is often very large. Thus an investor must see a large price increase just to

recoup the spread and break-even. The second is that collectibles are subject to fads (that risk has

been referred to as stylistic risk). For example, Chinese ceramics maybe actively sought by many

investors today, leading to high prices and big returns for earlier purchasers. However, they may fall

out of favor later on and plunge in value. Unlike financial assets, there is no such thing as fair value

for collectibles that can act as a kind of anchor for the market price.

Current Assets :-

The second category of assets included in the balance sheet are current assets. In contrast to fixed

assets, they are short-term in nature. They refer to assets/resources, which are either held in the form

of cash or ate expected to be realized to cash within the accounting period in the normal operation

cycle of the business. The term operating cycle means the time span during which cash is converted

into inventory, inventory, into receivable/cash sales and receivables into cash. Conventionally, suchassets are held for a short period of time, usually not more than a year. These are also know as liquid

assets. Current assets include cash, marketable securities, accounts receivable (debtors), notes/bills

receivables and inventory.

Cashis the most liquid current asset and includes cash to hand and cash at bank. It provides instant

liquidity and can be used to meet obligations/acquire without assets without any delay.

Marketable securitiesare short-term investments, which are both readily marketable and are expected

to be converted into cash within a year. They provide an outlet to invest temporary surplus /idle

Funds/cashAccording to generally accepted accounting principles, marketable securities are shown in

the balance sheet below the cost or the market price. When, however, show at cost, the current market

value is also shown in parenthesis.



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Accounts receivablerepresent the amount that the customers owe to the firm, arising from the sale of

goods on credit they are shown in the balance sheet at the amount owed less an allowance (bad debts)

for the portion which may but be collected.

Notes/bills payablerefer to the amounts owned by outsiders for which written acknowledgments of

the obligations are available.

Inventory means the aggregate of those items which are (i) held for sale in the ordinary course of

business (finished goods), (ii) in the process of production for such sales (work-in-process) or (iii) to

be currently consumed in the production of goods and services (raw materials) to be available for sale.

It is the least liquid current assets. Included in inventory are raw materials, working process (semi-

finished) and finished goods. Each of these serves a useful purpose in the process of production and

sale. Inventory is reported in the balance sheet at the cost or market value whichever is lower.

Investments :-

The third category of fixed assets is investments. They represent investments of funds in the securities

of another company. They are long-term assets outside the business of the firm. The purpose of such

investments is either in earn return or/and to control another company. It is customarily shown in the

balance sheet at costs with the market value shown in parenthesis.



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Other assets :

This included in this category of assets are what are called a deferred charge that is advertisement

expenditure preliminary expenses and so on. They are pre-payments for services/benefits for the

periods exceeding the accounting period.

Liabilities:

The second major content of the balance sheet is liabilities defined as the claims of outsiders that is,

other than owners. The assets have to be financed by different sources. One of source of funds is

borrowing long-term as well as short-term. The firms can borrow on a long-term basis from

financial institutions/banks or through bonds/mortgages/debentures, and so on. The short-term

borrowing may be in the form of purchase of goods and services on credit. These outside sources

from which a firm can borrow are termed as liabilities. Since they finance the assets, they are, in a

sense, claims against the assets. The amount shown against the liability items is on the basis of the

amount owned, not the amount payable. Depending upon the periodicity of the funds, liabilities can

be classified into (1) long-term liabilities and (2) current liabilities.

Long-term Liabilities They are so called because the exceeding one year. In other words, such

liabilities represent obligations of a firm payable after the accounting period.

Debentures or bonds are issued by a firm to the public to raise debt. A debenture or a bond is a

general obligation of the firm to pay interest and return the principal sum as per the agreement. Loan

raised through Issue of debentures or bonds may be secured or unsecured.

Secured loansare the long-term borrowings with fixed assets pledged as security. Term loans from

financial institutions and commercial banks are secured against the assets of the firm.

They have to be repaid/redeemed either in lump sum at the maturity of the loan/debenture or in

installments over the life of the loan. Long-term liabilities are shown in the balance sheet net of

redemption/repayment.



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Current Liabilities In contrast, the long term-liabilities, such liabilities are obligations to outsiders

repayable in a short period, usually within the accounting period or the operating cycle of the firm. It

can be said to be the counterpart of the current assets. Conventionally, they are paid; out of the current

assets; in some cases, however existing current liabilities can be liquidated through the creation ofadditional current liabilities.

Sundry creditors or accounts payable represent the current liability towards suppliers from whom the

firm has purchased raw materials on credit. This liability is shown in the balance sheet till the

payment has been made to the creditors.

Bills payableare the promises made in writing by the firm to make payment of a specified sum to

creditors at some specific date. Bills are written by creditors over the firm and become bill payable

once they are accepted by the firm. Bills payable have a life of less than a year; therefore, they are

shown as current liabilities in the balance sheet.

Bank borrowingsform a substantial part of current liabilities of a large number of companies in India.

Commercial banks advance short-term credit to firms or financing their current assets. Banks advance

short-term credit to firms or financing their current assets. Banks may also provide funds (term loans)

for a financing a firms fixed assets. Such loans will be grouped under long-term liabilities. In India, it

is a common practice to include both short and long-term borrowings under loan funds.

Provisions are other types of current liabilities. They include provision for taxes or provision for

dividends. Every business has to pay taxes on its income. Usually, it takes some time to finalize the

amount of tax with the tax authorities. Therefore, the amount of tax is estimated and shown as

provision for taxes or tax liability in the balance sheet. Similarly, provision for paying dividends to

shareholders may be created and shown as current liability.

Expenses payable or outstanding expensesare also current liabilities. The firm may owe payments to

its employees and others at the end of the accounting period for the services received in the current

year. These payments are payable within a very short period. Examples of outstanding expenses are

wages payable, rent payable, or commission payable.



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Income received in advanceis yet another example of current liability. A firm can sometimes receive

income for gods or services to be supplied in the future. As goods or services have to be provided

within the accounting period, such receipts are shown as current liabilities in the balance sheet.

Installment of long-term loansare payable periodically. That portion of the long-term loan which is

payable in the current year will for part of current liabilities.

Deposits from publicmay be raised by a firm for financing its current assets. These may therefore

classified under current liabilities. It may be noted that public deposits may be raised for duration of

one year through three years.

Definition of depreciation:

Financial Reporting Standard 15 (covering the accounting for tangible fixed assets)

defines depreciation as follows:

The wearing out, using up or other reduction in the useful economic life of a tangible

fixed asset whether arising from use effusion of time or obsolescence through either changes in

technology or demand for goods and services produced by the asset.

A portion of the benefits of the fixed asset will be used up or consumed in each accounting

period of its life in order to generate revenue. To calculate profit for a period, it is necessary to match

expenses with the revenues they help earn.

In determining the expenses for a period, it is therefore important to include an amount to

represent the consumption of fixed assets during that period (that is, depreciation).

In essence, depreciation involves allocating the cost of the fixed asset (less any residual value)

over its useful life. To calculate the depreciation charge for an accounting period, the following

factors are relevant:

-The cost of the fixed asset;



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-The (estimated) useful life of the asset;

-The (estimated) residual value of the asset.

What is the relevant cost of a fixed asset

The cost of a fixed asset includes all amounts incurred to acquire the asset and any amount that can be

directly attributable to bringing the asset into working condition.

Directly attributable cost may include:

-Delivery costs

-Costs associated with acquiring the asset such as stamp duty and import duties

-Costs of preparing the site for installation of the asset

-Professional fees, such as legal fees and architects fees

Note that general overhead costs or administration costs would not costs of a fixed asset (e.g. the cost

of the factory building in which the asset is kept, or the cost of the maintenance team who keep the

asset in good working condition)

The cost of subsequent expenditure on a fixed asset will be added to the cost of the asset provided that

this expenditure enhances the benefits of the fixed asset or restores any benefits consumed.

This means that major improvements or a major overhaul may be capitalized and included as part of

the cost of the asset in the accounts.

However, the costs of repairs or overhauls that are carried out simply to maintain existing

performance will be treated as expenses of the accounting period in which the work is done, and

charged in full as an expense in that period.



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DEPRECIATION AND SALVAGE VALUE:

Although the useful life of equipment (a fixed asset) may be long, it is nonetheless limited. Eventually

the equipment will lose all productive worth and will possess only salvage value

(Scrap value). Accounting demands a period-by-period matching of costs against income. Hence, the

cost of a fixed asset (over and above its salvage value) is distributed over the assets estimated

lifetime. This spreading of the cost over the periods which receive benefits is known as depreciation.

The depreciable amount of a fixed asset that is, cost minus salvage value may be written off in

different ways. For example, the amount may be spread evenly over the years affected as in the

straight-line method. The units of production method bases depreciation for each period on the

amount of output. Two accelerated methods, the double declining balance method and the sum-of-the

years and digits method, provide for greater amounts of depreciation in the earlier years.

DEPRECIATION METHOD:

STRAIGHT-LINE METHOD

This is the simplest and most widely used depreciation method. Under this method an equal

portion of the cost (above salvage value) of the asset is allocated to each period of use. The periodic

depreciation charge is expressed as

Cost Salvage Value

-------------------------- = Depreciation

Estimated life

UNITS OF PRODUCTION METHOD



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Where the use of equipment varies substantially from year to year, the units-of-production.

This Method is appropriate for determining the depreciation. For example, in some year logging

operations may be carried on for 200 days, in other years for 230 days, in still other years for only 160

days, depending on weather conditions. Under this method, depreciation is computed for theappropriate unit of output or production (such as hours, miles, or pounds) by the following formula:

Cost Salvage

= Unit Depreciation

The total number of units

used I a year is the multiplied by the unit depreciation to arrive at

Estimated units of production during lifetime

the depreciation amount for that year.

We can express this as

Unit depreciation usage = depreciation

Cost - Salvage

________________ usage = depreciation

Estimated life (in units)

This method has the advantage of relating depreciation cost directly to income.



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DOUBLE DECLINING BALANCE METHOD:

The double declining balance method produces the highest amount of depreciation in the earlier years.

It does not recognize salvage or scrap values. Instead, the book value of the asset remaining at the end

of the depreciation period becomes the salvage or scrap value. Under this method, the straight-line

rate is doubled and applied to the declining book balance each year. Many companies prefer the

double declining balance method because of the greater write-off in the earlier years, a time when

the asset contributes most to the business and when the expenditure was actually made.

The procedure is to apply a fixed rate to the declining book value of the asset each year. As the book

value declines, the depreciation becomes smaller.

100%

2 = Depreciation rate

Estimated life in years



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SUM-OF-THE-YEARS AND DIGITS METHOD

With this method, the years of assets lifetime are labeled 1, 2 and 3 and so on, and the depreciation

amounts are based on a series of fractions that have the sum of the years, digit as their common

denominator. The greatest digit assigned to a year is used as the numerator for the first year, the next

greatest digit for the second year, and so forth



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INDUSTRY PROFILE

In the most general sense of the word, a cement is a binder, a substance which sets and hardens

independently, and can bind other materials together. The word "cement" traces to the Romans, whoused the term "opus caementicium" to describe masonry which resembled concrete and was made

from crushed rock with burnt limeas binder. The volcanic ash and pulverized brick additives which

were added to the burnt lime to obtain a hydraulic binder were later referred to as cementum,

cimentum, cement and cement. Cements used in construction are characterized as hydraulic or non-

hydraulic.

The most important use of cement is the production ofmortarandconcretethe bonding of natural or

artificial aggregates to form a strong building material which is durable in the face of normal

environmental effects.

Concrete should not be confused with cement because the term cementrefers only to the dry powder

substance used to bind the aggregate materials of concrete. Upon the addition of water and/or

additives the cement mixture is referred to as concrete, especially if aggregates have been added.

It is uncertain where it was first discovered that a combination of hydrated non-hydraulic lime and a

Pozzalana produces a hydraulic mixture (see also: Pozzalana reaction), but concrete made from such

mixtures was first used on a large scale by engineers. They used both natural Pozzalana ( trass orpumice) and artificial Pozzalana (ground brick or pottery) in these concretes. Many excellent

examples of structures made from these concretes are still standing, notably the huge monolithic dome

of the Pantheon in Romeand the massive Baths of Caracalla. The vast system ofRoman aqueducts

also made extensive use of hydraulic cement. The use of structural concrete disappeared in medieval

Europe, although weak pozzolanic concretes continued to be used as a core fill in stone walls and

columns.

http://en.wikipedia.org/wiki/Ancient_Romehttp://en.wikipedia.org/wiki/Ancient_Romehttp://en.wikipedia.org/wiki/Calcium_oxidehttp://en.wikipedia.org/wiki/Calcium_oxidehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Slaked_limehttp://en.wikipedia.org/wiki/Pozzolanhttp://en.wikipedia.org/wiki/Pozzolanic_reactionhttp://en.wikipedia.org/wiki/Trasshttp://en.wikipedia.org/wiki/Pumicehttp://en.wikipedia.org/wiki/Pantheon,_Romehttp://en.wikipedia.org/wiki/Romehttp://en.wikipedia.org/wiki/Romehttp://en.wikipedia.org/wiki/Baths_of_Caracallahttp://en.wikipedia.org/wiki/Roman_aqueducthttp://en.wikipedia.org/wiki/Calcium_oxidehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Slaked_limehttp://en.wikipedia.org/wiki/Pozzolanhttp://en.wikipedia.org/wiki/Pozzolanic_reactionhttp://en.wikipedia.org/wiki/Trasshttp://en.wikipedia.org/wiki/Pumicehttp://en.wikipedia.org/wiki/Pantheon,_Romehttp://en.wikipedia.org/wiki/Romehttp://en.wikipedia.org/wiki/Baths_of_Caracallahttp://en.wikipedia.org/wiki/Roman_aqueducthttp://en.wikipedia.org/wiki/Ancient_Rome


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Modern cement

Modern hydraulic cements began to be developed from the start of the Industrial Revolution (around

1800), driven by three main needs:

Hydraulic rendersfor finishing brick buildings in wet climates

Hydraulic mortars for masonry construction of harbor works etc, in contact with sea water.

Development of strong concretes.

In Britain particularly, good quality building stone became ever more expensive during a period of

rapid growth, and it became a common practice to construct prestige buildings from the new industrial

bricks, and to finish them with a stuccoto imitate stone. Hydraulic limes were favored for this, but the

need for a fast set time encouraged the development of new cements. Most famous was Parker's

"Roman cement." This was developed byJames Parkerin the 1780s, and finally patented in 1796. It

was, in fact, nothing like any material used by the Romans, but was a "Natural cement" made by

burningseptaria - nodules that are found in certain clay deposits, and that contain both clay minerals

and calcium carbonate. The burnt nodules were ground to a fine powder. This product, made into a

mortar with sand, set in 515 minutes. The success of "Roman Cement" led other manufacturers to

develop rival products by burning artificial mixtures of clay and chalk.

John Smeaton made an important contribution to the development of cements when he was planning

the construction of the third Eddystone Lighthouse (1755-9) in the English Channel. He needed a

hydraulic mortar that would set and develop some strength in the twelve hour period between

successive high tides. He performed an exhaustive market research on the available hydraulic limes,

visiting their production sites, and noted that the "hydraulicity" of the lime was directly related to the

clay content of the limestone from which it was made. Smeaton was a civil engineerby profession,

and took the idea no further. Apparently unaware of Smeaton's work, the same principle was

identified by Louis Vicat in the first decade of the nineteenth century. Vicat went on to devise amethod of combining chalk and clay into an intimate mixture, and, burning this, produced an

"artificial cement" in 1817. James Frost,orking in Britain, produced what he called "British cement" in

a similar manner around the same time, but did not obtain a patent until 1822. In 1824, Joseph Aspdin

patented a similar material, which he called Portland cement, because the render made from it was in

color similar to the prestigious Portland stone.

All the above products could not compete with lime/pozzolan concretes because of fast-setting (giving

insufficient time for placement) and low early strengths (requiring a delay of many weeks before

formwork could be removed). Hydraulic limes, "natural" cements and "artificial" cements all rely

http://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Kingdom_of_Great_Britainhttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Roman_cementhttp://en.wikipedia.org/wiki/Roman_cementhttp://en.wikipedia.org/wiki/James_Parker_(cement_maker)http://en.wikipedia.org/wiki/James_Parker_(cement_maker)http://en.wikipedia.org/wiki/Concretion#Septarian_concretionshttp://en.wikipedia.org/wiki/Concretion#Septarian_concretionshttp://en.wikipedia.org/wiki/John_Smeatonhttp://en.wikipedia.org/wiki/Eddystone_Lighthousehttp://en.wikipedia.org/wiki/Civil_engineerhttp://en.wikipedia.org/wiki/Civil_engineerhttp://en.wikipedia.org/wiki/Louis_Vicathttp://en.wikipedia.org/wiki/James_Frost_(cement_maker)http://en.wikipedia.org/wiki/Joseph_Aspdinhttp://en.wikipedia.org/wiki/Portland_stonehttp://en.wikipedia.org/wiki/Portland_stonehttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Kingdom_of_Great_Britainhttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Roman_cementhttp://en.wikipedia.org/wiki/James_Parker_(cement_maker)http://en.wikipedia.org/wiki/Concretion#Septarian_concretionshttp://en.wikipedia.org/wiki/John_Smeatonhttp://en.wikipedia.org/wiki/Eddystone_Lighthousehttp://en.wikipedia.org/wiki/Civil_engineerhttp://en.wikipedia.org/wiki/Louis_Vicathttp://en.wikipedia.org/wiki/James_Frost_(cement_maker)http://en.wikipedia.org/wiki/Joseph_Aspdinhttp://en.wikipedia.org/wiki/Portland_stone


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upon theirbelite content for strength development. Belite develops strength slowly. Because they

were burned at temperatures below 1250 C, they contained no alite, which is responsible for early

strength in modern cements. The first cement to consistently contain alite was made by Joseph

Aspdin's son William in the early 1840s. This was what we call today "modern" Portland cement.Because of the air of mystery with which William Aspdin surrounded his product, others (e.g. Vicat

andI C Johnson) have claimed precedence in this invention, but recent analysis of both his concrete

and raw cement have shown that William Aspdin's product made at Northfleet,Kent was a true alite-

based cement. However, Aspdin's methods were "rule-of-thumb": Vicat is responsible for establishing

the chemical basis of these cements, and Johnson established the importance of sintering the mix in

the kiln.

William Aspdin's innovation was counter-intuitive for manufacturers of "artificial cements", because

they required more lime in the mix (a problem for his father), because they required a much higher

kiln temperature (and therefore more fuel) and because the resulting clinkerwas very hard and rapidly

wore down the millstones which were the only available grinding technology of the time.

Manufacturing costs were therefore considerably higher, but the product set reasonably slowly and

developed strength quickly, thus opening up a market for use in concrete. The use of concrete in

construction grew rapidly from 1850 onwards, and was soon the dominant use for cements. Thus

Portland cement began its predominant role. it is made from water and sand

http://en.wikipedia.org/wiki/Belitehttp://en.wikipedia.org/wiki/Belitehttp://en.wikipedia.org/wiki/Alitehttp://en.wikipedia.org/wiki/Alitehttp://en.wikipedia.org/wiki/William_Aspdinhttp://en.wikipedia.org/wiki/Isaac_Charles_Johnsonhttp://en.wikipedia.org/wiki/Isaac_Charles_Johnsonhttp://en.wikipedia.org/wiki/Northfleethttp://en.wikipedia.org/wiki/Kenthttp://en.wikipedia.org/wiki/Kenthttp://en.wikipedia.org/wiki/Clinker_(cement)http://en.wikipedia.org/wiki/Belitehttp://en.wikipedia.org/wiki/Alitehttp://en.wikipedia.org/wiki/William_Aspdinhttp://en.wikipedia.org/wiki/Isaac_Charles_Johnsonhttp://en.wikipedia.org/wiki/Northfleethttp://en.wikipedia.org/wiki/Kenthttp://en.wikipedia.org/wiki/Clinker_(cement)


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Types of modern cement

Portland cement

Cement is made by heating limestone (calcium carbonate), with small quantities of othermaterials

(such as clay) to 1450C in a kiln, in a process known as calcination, whereby a molecule ofcarbon

dioxide is liberated from the calcium carbonate to form calcium oxide, or lime, which is then blended

with the other materials that have been included in the mix . The resulting hard substance, called

'clinker', is then ground with a small amount of gypsum into a powder to make 'Ordinary Portland

Cement', the most commonly used type of cement (often referred to as OPC).

Portland cement is a basic ingredient of concrete, mortar and most non-speciality grout. The most

common use for Portland cement is in the production of concrete. Concrete is a composite material

consisting ofaggregate(gravel and sand), cement, and water. As a construction material, concrete can

be cast in almost any shape desired, and once hardened, can become a structural (load bearing)

element. Portland cement may be gray or white.

Portland cement blends

These are often available as inter-ground mixtures from cement manufacturers, but similar

formulations are often also mixed from the ground components at the concrete mixing plant.

Portland blast furnace cement contains up to 70%ground granulated blast furnace slag, with the rest

Portland clinker and a little gypsum. All compositions produce high ultimate strength, but as slag

content is increased, early strength is reduced, while sulfate resistance increases and heat evolution

diminishes. Used as an economic alternative to Portland sulfate-resisting and low-heat cements.

Portland flyash cement contains up to 30% fly ash. The fly ash ispozzolanic, so that ultimate strength

is maintained. Because fly ash addition allows a lower concrete water content, early strength can also

be maintained. Where good quality cheap fly ash is available, this can be an economic alternative to

ordinary Portland cement.

Portland pozzolan cement includes fly ash cement, since fly ash is a pozzolan, but also includes

cements made from other natural or artificial pozzolans. In countries where volcanic ashes are

available (e.g. Italy, Chile, Mexico, the Philippines) these cements are often the most common form in

use.

http://en.wikipedia.org/wiki/Limestonehttp://en.wikipedia.org/wiki/Clayhttp://en.wikipedia.org/wiki/Kilnhttp://en.wikipedia.org/wiki/Calcinationhttp://en.wikipedia.org/wiki/Carbon_dioxidehttp://en.wikipedia.org/wiki/Carbon_dioxidehttp://en.wikipedia.org/wiki/Calcium_oxidehttp://en.wikipedia.org/wiki/Gypsumhttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Grouthttp://en.wikipedia.org/wiki/Grouthttp://en.wikipedia.org/wiki/Construction_aggregatehttp://en.wikipedia.org/wiki/Construction_aggregatehttp://en.wikipedia.org/wiki/Construction_aggregatehttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Fly_ashhttp://en.wikipedia.org/wiki/Pozzolanichttp://en.wikipedia.org/wiki/Pozzolanhttp://en.wikipedia.org/wiki/Limestonehttp://en.wikipedia.org/wiki/Clayhttp://en.wikipedia.org/wiki/Kilnhttp://en.wikipedia.org/wiki/Calcinationhttp://en.wikipedia.org/wiki/Carbon_dioxidehttp://en.wikipedia.org/wiki/Carbon_dioxidehttp://en.wikipedia.org/wiki/Calcium_oxidehttp://en.wikipedia.org/wiki/Gypsumhttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Grouthttp://en.wikipedia.org/wiki/Construction_aggregatehttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Fly_ashhttp://en.wikipedia.org/wiki/Pozzolanichttp://en.wikipedia.org/wiki/Pozzolan


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Portland silica fume cement. Addition of silica fume can yield exceptionally high strengths, and

cements containing 5-20% silica fume are occasionally produced. However, silica fume is more

usually added to Portland cement at the concrete mixer.

Masonry cements are used for preparing bricklaying mortars and stuccos, and must not be used in

concrete. They are usually complex proprietary formulations containing Portland clinker and a

number of other ingredients that may include limestone, hydrated lime, air entrainers, retarders,

waterproofers and coloring agents. They are formulated to yield workable mortars that allow rapid

and consistent masonry work. Subtle variations of Masonry cement in the US are Plastic Cements and

Stucco Cements. These are designed to produce controlled bond with masonry blocks.

Expansive cements contain, in addition to Portland clinker, expansive clinkers (usually sulfoaluminate

clinkers), and are designed to offset the effects of drying shrinkage that is normally encountered with

hydraulic cements. This allows large floor slabs (up to 60 m square) to be prepared without

contraction joints.

White blended cements may be made using white clinker and white supplementary materials such as

high-purity metakaolin.

Colored cements are used for decorative purposes. In some standards, the addition of pigments to

produce "colored Portland cement" is allowed. In other standards (e.g. ASTM), pigments are not

allowed constituents of Portland cement, and colored cements are sold as "blended hydraulic

cements".

Very finely ground cements are made from mixtures of cement with sand or with slag or other

pozzolan type minerals which are extremely finely ground together. Such cements can have the same

physical characteristics as normal cement but with 50% less cement particularly due to their increased

surface area for the chemical reaction. Even with intensive grinding they can use up to 50% less

energy to fabricate than ordinary Portland cements.

Non-Portland hydraulic cements:

Pozzolan-lime cements. Mixtures of groundpozzolan and lime are the cements used by the Romans,

and are to be found in Roman structures still standing (e.g. the Pantheon in Rome). They develop

strength slowly, but their ultimate strength can be very high. The hydration products that produce

strength are essentially the same as those produced by Portland cement.

Slag-lime cements. Ground granulated blast furnace slag is not hydraulic on its own, but is "activated"

by addition of alkalis, most economically using lime. They are similar to pozzolan lime cements in

http://en.wikipedia.org/wiki/Silica_fumehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Stuccoshttp://en.wikipedia.org/wiki/Stuccoshttp://en.wikipedia.org/wiki/Metakaolinhttp://en.wikipedia.org/wiki/Metakaolinhttp://en.wikipedia.org/wiki/Pozzolanic_ashhttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Silica_fumehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Stuccoshttp://en.wikipedia.org/wiki/Metakaolinhttp://en.wikipedia.org/wiki/Pozzolanic_ashhttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slag


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their properties. Only granulated slag (i.e. water-quenched, glassy slag) is effective as a cement

component.

Supersulfated cements. These contain about 80% ground granulated blast furnace slag, 15% gypsum

or anhydrite and a little Portland clinker or lime as an activator. They produce strength by formation

ofettringite, with strength growth similar to a slow Portland cement. They exhibit good resistance to

aggressive agents, including sulfate.

Calcium aluminate cementsare hydraulic cements made primarily from limestone and bauxite. The

active ingredients are monocalcium aluminate CaAl2O4 (CaO Al2O3 or CA in Cement chemist

notation, CCN) and mayeniteCa12Al14O33 (12 CaO 7 Al2O3 , or C12A7 in CCN). Strength forms by

hydration to calcium aluminate hydrates. They are well-adapted for use in refractory (high-

temperature resistant) concretes, e.g. for furnace linings.

Calcium sulfoaluminate cements are made from clinkers that include ye'elimite (Ca4(AlO2)6SO4 or

C4A3 in Cement chemist's notation) as a primary phase. They are used in expansive cements, in

ultra-high early strength cements, and in "low-energy" cements. Hydration produces ettringite, and

specialized physical properties (such as expansion or rapid reaction) are obtained by adjustment of the

availability of calcium and sulfate ions. Their use as a low-energy alternative to Portland cement has

been pioneered in China, where several million tonnes per year are produced.[12][13] Energy

requirements are lower because of the lower kiln temperatures required for reaction, and the lower

amount of limestone (which must be endothermically decarbonated) in the mix. In addition, the lower

limestone content and lower fuel consumption leads to a CO 2 emission around half that associated

with Portland clinker. However, SO2 emissions are usually significantly higher.

"Natural" Cements correspond to certain cements of the pre-Portland era, produced by burning

argillaceous limestones at moderate temperatures. The level of clay components in the limestone

(around 30-35%) is such that large amounts ofbelite (the low-early strength, high-late strength

mineral in Portland cement) are formed without the formation of excessive amounts of free lime. Aswith any natural material, such cements have highly variable properties.

Geopolymer cements are made from mixtures of water-soluble alkali metal silicates and

aluminosilicate mineral powders such as fly ash and metakaolin.

http://en.wikipedia.org/wiki/Ettringitehttp://en.wikipedia.org/wiki/Ettringitehttp://en.wikipedia.org/wiki/Ettringitehttp://en.wikipedia.org/wiki/Calcium_aluminate_cementshttp://en.wikipedia.org/wiki/Calcium_aluminate_cementshttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Mayenitehttp://en.wikipedia.org/wiki/Mayenitehttp://en.wikipedia.org/wiki/Ye'elimitehttp://en.wikipedia.org/wiki/Ye'elimitehttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Cement#cite_note-11http://en.wikipedia.org/wiki/Cement#cite_note-12http://en.wikipedia.org/wiki/Cement#cite_note-12http://en.wikipedia.org/wiki/Argillaceous_mineralshttp://en.wikipedia.org/wiki/Belitehttp://en.wikipedia.org/wiki/Belitehttp://en.wikipedia.org/wiki/Geopolymershttp://en.wikipedia.org/wiki/Fly_ashhttp://en.wikipedia.org/wiki/Metakaolinhttp://en.wikipedia.org/wiki/Metakaolinhttp://en.wikipedia.org/wiki/Ettringitehttp://en.wikipedia.org/wiki/Calcium_aluminate_cementshttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Mayenitehttp://en.wikipedia.org/wiki/Ye'elimitehttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Cement#cite_note-11http://en.wikipedia.org/wiki/Cement#cite_note-12http://en.wikipedia.org/wiki/Argillaceous_mineralshttp://en.wikipedia.org/wiki/Belitehttp://en.wikipedia.org/wiki/Geopolymershttp://en.wikipedia.org/wiki/Fly_ashhttp://en.wikipedia.org/wiki/Metakaolin


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COMPANY PROFILE

INTRODUCTION :-

The company zuari Agro Ltd was in corporate on 12th

may 1967 zuari cement limited has

been himself off as a separate company with 50-50 share holding by Zuari industries limited



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(A.K.K.Birla group company) and Italy cement group (as Italian cement company) with effect from 1-

4-2000 with Head-quarters at Bangalore, Zuari and Italy cement group (through cement Francis group

company) have formed joint venture company Viz., Zuari cement limited. It is projected to increase

the cement capacity of 2.2MT.

TEXMACO Limited in the year 1995 was changed to Zuari cement by division of ZUARI

CHEMICAL LIMITED, jointly promoted by K.K.BIRLA & USX CORPORATION a major steel

leader in U.S.A.

LOCATION OF THE PLANT :-

Zuari cement is running under the Flagship of Zuari Agro chemicals Limited. Zuari cement is

strategies located 6 kms away from Yerraguntla town of Kamalapuram (Taluk) in Kadapa district

Andhra Pradesh. Railway line has been laid connection the Yerraguntla station of Zuari Cements.

Location of the plant at this place is having following advantages.

Location in industrial belt of Rayalaseema with sophisticated facilities like water, electricity,

labor, transport etc.

Present of the best limestone proved scientifically for cement.

Low free lime to ensure reduced surface cracks.

Low heat of hydration for better soundness.

Low magnesia content to ensure reduced tensile cracks.

Specially designed setting time to suit Indian working conditions.

JOINT VENTURE WITH ITALIC CEMENT :-



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Zuari group has identified as one of the core business to grow. It has therefore, been decided to

constitute a separate corporate entity and hire off cement business to it. To accelerate the growth and

achieve capacity additions quickly it decided to form a joint venture with a strategic partner after

careful evaluation the multinational cement giant italic cement group was identified to be suitable

partner for pursuing growth.

Zuari and Italic cement groups have agreed to form a joint

venture with 50-50 equity sharing. The Zuari cement business will get

transferred to the joint venture company Viz. Zuari cement limited.

It is proposed to have quarters of cement business at Hyderabad. It is proposed to increase the

capacity of1.7 MTPA in span of 3 to 4 years. Italic cement group is the largest producer & distributor

of cement in European and one of the leaders in the world maker place. The group operates in 13

countries including Belgium, Canada, France, Greece, Italy, Moraco, Spain, Turkey and U.S with

recent acquisition in Bulgaria, Kazakhstan and Thailand.

The group was founded in 1864 and had its head quarters in Bermago, Italy; currently the group

has 54 plans with an installed capacity of 40 MTPA spread over 13 countries. The group also has 500

RMC plants all over the world. The consolidated group turn over in 1998 was 3.4 billion US$. The

group has excellent R & D and Machine design facilities head quartered at Bermago, Italy, which

renders technical support to all over the group plants.

ITALIC CEMENTRIC GROUP :-



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Our Mission

Our Shared Ambition: Effective and Efficient

To become the most effective and most efficient cement manufacture and distributor

in the world.

Our Approach: We are local we think Global.

Cement aggregates and ready to mix concrete manufacture and distribution are localbusiness. Around the world we serve local customers in local markets with local needs.

Our Way of Working: Technological leadership is our Goal.

Our technology plays the key role in realizing our ambition we are committed to

increasing the value of our groups, our companies, our products and services, the capabilities

of our employees and the ecological standards by which we operate.

Our spirit: One team worldwide.

We operate worldwide in many diverse markets, cultures and continents.

We are proud of our cultural diversity and our distinctive character.

ORGANIZAITONAL STRUCTURE :-

The organizational structure of Zuari is simple and flat. The employees are assigned grades based on

their pay packages. These grades are not based on the job responsibilities may have different grades

for reasons like duration of association with the company.

OBJECTIVES OF THE COMPANY:



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To Provide employment to the local employees

To supply best cement at economical prices

To get the optimum utilization of the raw materials available of their own mines.

Manufacturing quality cement and to stand as a market leader in south India.

RECENT DEVELOPMENTS

Zuari cement has signed on agreement with the cement corporation of India (CCI) to market

CCIs cement produces from their facility at tender in Andhra Pradesh.

Zuari Cement shall market this in the state of Tamil Nadu, Kerala, Andhra Pradesh

and pond cherry. The incremental tonnage for zuari cement as a result of this arrangement is

around 3.5 lakh tones.

SOCIAL RESPONSIBILITY

As part of social responsibility the company is maintaining one dispensary where the near by

villagers are treated free of cost. It has one primary school & also it has constructed bus shelters,

traffic signals water sheds, water tanks hospitals, houses & road dividers.

MOTIVATION:-

Motivation in zuari cement limited is one by encouraging the employees by awarding

them rewarding them and identifying their talents and promoting them to higher positions.

The career development is possible through proper motivational factors.

MAJOR USERS



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Zuari cement is marked through out south India by a wide network of stockiest. The zuari sales

officers and representatives are based in almost all cities.

And towns in south India, Major users of zuari cement are as follows.

Madras refineries limited.

Airport authority of India

Tamilnadu real estate limited

East coast construction and industries limited.

Tamil Nadu port trust.

Asia pacific hotels limited

Grind well Norton limited

Tirumala Tirupati Devasthanam

APSEB Srisailam power project.

Ramco industries visaka industries.

Hyderabad Everest limited.

CORPORATE MARKETING OFFICE:-

Zuari cements limited corporate marketing office is at chennai (Tamil Nadu) and branches are at:

Hyderabad - Andhra Pradesh.

Vishakhapatnam - Andhra Pradesh.

Bangalore - Karnataka.

Cochin - Kerala.

Panaji - Goa.



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Chennai - Tamil Nadu.

Bhubaneswar - Orissa.

COMPETITORS

Penna - Tadipathri

UltraTech - Tadipathri

Malabar - Cochin

DATA ANALYSIS AND INTERPRETATION:

The firm should evolve strategies regarding the following two facts.

Trend Analysis:-

In Financial Analysis the direction of changes over a period of years is of initial

importance. Time series or trend analysis of ratios indicators the direction of change. This

kind of analysis is particularly applicable to the items of profit and loss account. It is

advisable that trends of sales and net income may be studies in the light of two factors. The

rate of fixed expansion or secular trend in the growth of the business and the general price

level. It might be found in practice that a number of firms would be shown price level. It

might be found in practice that a number of firms would be shown a persistent growth over

period of years. But to get a true trend of growth, the sales figure should be adjusted by a

suitable index of general prices. In other words, sales figures should be deflated for rising

price level. Another method of securing trend of growth and one which can be used instead

of the adjusted sales figure or as check on them is to tabulate and plot the output or physical

volume of the sales expressed in suitable units of measure. If the general price level is not



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considered while analyzing trend of growth, it can be mislead management they may become

unduly optimistic in period of prosperity and pessimistic in duel periods.

For trend analysis, the use of index numbers is generally advocated the procedure followed is

to assign the numbers 100 to items of the base year and at calculate percentage change in

each items of other years in relation to the base year. The procedure may be called as fixed

percentage method.

This margin determines the direction of upward or downward and involves the

implementation of the percentage relationship of the each statement item beans to the same in

the base year. Generally the first year is taken as the base year. The figure of the base year

are taken as 100 and trend ratio he other year are calculated on the basis of one year. Here an

attempt is made to know the growth total investment and fixed assets of Zuari Cement

Industries for Six years that is 2004-2005 to 2009-2010.



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Table-I

YEAR INVESTMENT TREND PERCENTAGE

2006-2007 44,85,21,386 100

2007-2008 39,68,35,265 64.25

2008-2009 24,99,02,930 56.71

2009-2010 28,19,24,444 62.85

2010-2011 29,01,51,000 64.69

2011-2012 28,87,28,000 64.37

Graph Showing:

Interpretation: -



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From the analysis of the above table it can be observed that the growth rate of total

investment of Zuari Cement Industries is in downward trend which shows table of the Zuari Cement

Industries investment in total investment is decreasing from time to time during the year 2006-2007.

It was recorded 100%. But it is decreasing in the year 2011-2012 which shows that there is a netdecrease to 64.37%. The average investment in total assets was found to be Rs. 3, 33,466.27 during

the review period. During the period of 2006-2007 it is Rs. 44, 85, 21,389 and it was decreased in the

year 2011-2012 Rs.2, 887.2



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GROWTH RATE IN FIXED ASSETS:

YEAR FIXED ASSETS PERCENTAGE

2006-2007 6,25,64,02,879 100

2007-2008 5,89,55,39,377 94.23

2008-2009 5,69,93,08,565 91.09

2009-2010 5,71,48,37,436 91.34

2010-2011 7,43,21,97,000 118.79

2011-2012 11,05,19,01,00 176.64

Graph Showing:



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Interpretation:

Growth rate in fixed assets, the examination of the above table reveals analysis and

interpretation.

During the year 2006-2007 the assets investment was recorded at 62564.03 and it is decreased to

Rs.1,10,519.01 in 2011-2012 the fixed assets investment is quite satisfactory.

The trend percentage in the year 2006-2007 is taken as the base year as 100% and it was increased to

176.64 in the year 2011-2012.

The average growth rate in fixed assets Rs.61996.566 in 6 years

RATIO ANALYSIS:

Ratio Analysis is a powerful tool of financial analysis. A ratio is defined as The indicated

quotient of two mathematical expression and as The relationship between for evaluating the

financial position and performance of a firm. The absolute accounting figure reported in financial

statement do not private a meaningful understanding of the performance and financial position of a

firm. An accounting figure conveys meaning when it is related to some other relevant information.



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Ratios help to summarize large quantities of financial data to make qualitative judgment about

the firms financial performance.

1. Fixed Assets to Net Worth Ratio:

This ratio establishes the relationship between Fixed Assets and Net Worth.

Net Worth = Share Capital + Reserves & Surplus + Retained Earnings.

Fixed Assets

Fixed Assets to Net Worth Ratio = --------------- X100

Net Worth

This ratio of Fixed Assets to Net Worth indicates the extent to which shareholder funds

are sunk into the fixed assets. Generally, the purchase of fixed assets should be financed by

shareholders, equity including reserves & surpluses and retained earnings. If the ratio is less than

100% it implies that owners funds are more than total Fixed Assets and a part of the working capital

is provided by the shareholders. When the ratio is more than 100% it implies that owners funds are

not sufficient to finance the fixed assets and the finance has to depend upon outsiders to finance the

fixed assets. There is no rule of thumb to interpret this ratio but 60% to 65% is considered to be

satisfactory ratio in case of industrial undertaking.

2. Fixed Assets Ratio:

This ratio explains whether the firm has raised adequate long term funds to meet its fixed

assets requirements and is calculated as under.



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Fixed Assets (Assets Depreciation)

------------------------------------------

Capital Employed

This ratio gives an idea as to what part of the capital employed has been used in purchasing

the fixed assets for the concern. If the ratio is less than one it is good for the concern.

3. Fixed Assets as a percentage to Current Liabilities:

The ratio measures the relationship between fixed assets and the funded debt and is a very

useful so the long term erection. The ratio can be calculated as below.

Fixed Assets as a percentage to Current Liabilities

Fixed Assets

= ---------------------

Current Liabilities

Total Investment Turnover Ratio:



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This ratio is calculated by dividing the net sales by the value of total assets that is (Net Sales /

Total Investment) or (Sales / Total Investment). A high ratio is an indicator of over trading of total

assets while a low ratio reveals idle capacity. The traditional standards for the ratio in two times

Sales

Total investment turnover ratio = ----------------------

Total investment

Fixed Assets Turnover Ratio:

This ratio expresses the number of times fixed assets are being turned over is a state period.

It is calculated as under:

Sales

------------------------------------------------

Net Fixed Assets (After Depreciation)

This ratio shows low well the fixed assets are being uses in the business. The ratio is

important is case of manufacturing concern because sales are produced not only by use of Current

Assets but also by amount invested in Fixed Assets the higher ratio, the better is the performance. Onthe other hand a low ratio indicated that fixed assets are not being efficiently utilized.

7 . Gross Capital Employed:



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The term Gross Capital Employed usually comprises the total assets, fixed as well as

current assets used in a business.

Gross Capital Employed = Fixed Assets + Current Assets

8. Return on Fixed Assets:

Profit after Tax

------------------- X 100

Fixed Assets

This ratio is calculated to measure the profit after tax against the amount invested in total

assets to ascertain whether assets are being utilized properly or not.

The higher the ratio the better it is for the concern

Fixed Assets to Net Worth:

NET WORTH = Share Capital + Reserves & Surplus + Retained Earning.



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If the ratio is less than 100%, it implies that owner funds are more than the fixed assets and

a part of working capital is provided by the share holder and vice-versa.

Fixed Assets

Fixed Assets to Net worth Ratio = ---------------X 100

Net Worth



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Table III

YEAR NETWORTH GROSS FIXED

ASSETS

RATO IN %

2006-2007 3,38,81.86 6,25,64.03 184.65

2007-2008 3,38,78.40 5,89,55.40 174.02

2008-2009 3,48,48.27 5,69,93.09 163.54

2009-2010 3,77,14.59 5,71,48.38 151.52

2010-2011 41,605.00 74,321.97 178.63

2011-2012 65,443.44 1,10,519.11 168.87



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Interpretation:

The Gross Fixed to Net worth Ratio is fluctuating from year to year. In the year 2006-2007 the gross

fixed assets to net worth ratio is 184.65. In the year 2011-2012 fixed assets to net worth to acquire the

ratio is 168.87.

The average net worth to fixed assets ratio i36385.62s Rs. Or fixed assets average ratio is

Rs.61996.668 the average percentage of fixed assets to net worth is 168.06.

The highest ratio recorded in 2006-2007 at 184.65 the lowest ratio is recorded at 151.52 in the year

2009-2010.

Fixed Assets as a Percentage to Long Term Liabilities:

Fixed Assets ratio is several of fixed assets to net worth is a ratio of fixed assets to long term

funds which is calculated as:

Fixed assets to long term liabilities =

Fixed Assets (After Depreciation)

= -----------------------------------X 100

Capital Employed

Table IV



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(Amt in lakhs)

YEAR FIXED ASSETS LONG TERM

FUNDS

PERCENTAGE

2006-2007 6,25,64.02 3,38,81.86 184.6

2007-2008 5,89,55.40 3,38,78.40 174.0

2008-2009 5,69,93.09 3,48,48.27 163.5

2009-2010 5,71,48.37 3,77,14.59 152.7

2010-2011 74,321.97 41,605.03 178.63

2011-2012 1,10,519.01 65,443.44 168.87

Graph Showing:



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Interpretation:

The fixed assets as a % of long-term liabilities the ratio is functioning from year to year. The fixed

assets as a percentage of long term liabilities is recorded at 184.5% in the year 2003 and it is recorded

at 152.7% in the year 2006-2007.

The highest ratio is recorded at 184.6 % in the 2006-2007 the lowest ratio is 152.7% in 2009-2010.



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Fixed Assets as Percentage Current Liabilities: -

Fixed Assets a Percentage to Current Liabilities =

Fixed Assets

---------------------

Current Liabilities

Table V

(Amt in lakhs)

YEAR FIXED ASSETS CURRENT

LIABILITIES

PERCENTAGE

2006-2007 6,25,64.03 20,350.59 3.07

2007-2008 5,89,55.40 24,099.52 2.44

2008-2009 5,69,93.09 21,480.90 2.65

2009-2010 5,71,48.37 23,072.27 2.17

2010-2011 74,321.97 23,745.24 3.12

2011-2012 1,10,519.01 36,253.41 3.04



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Graph Showing:

Interpretation:

The ratio was fluctuating trend percentage in review period.

From the above table it is observed that the ratio was recorded at 3.07 in the 2006-2007 and Its is

gradually changing to 3.04 in 2011-2012 which indicates that the current funds are used in the fixed

assets which is quite satisfactory.

The average ratio was recorded at during the 2.25% review period of time.

The highest ratio was recorded at 3.12 which are higher that the average ratio.



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The lowest ratio was recorded at 2.44, which is less than the average ratio.

Total Investment Turnover Ratio:

The total invest turnover ratio can be calculated by the formula as given under:

Sales

Total investment turnover Ratio = ----------------------

Total Investment



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Table VI

YEAR SALES (IN

LAKHS)

TOTAL

INVESTMENT

RATIOS

2004-2005 1,40,116.22 4485.21 31.2

2005-2006 1,35,375.24 3968.35 34.1

2006-2007 1,29,553.62 2499.02 51.84

2007-2008 1,42,195.78 2819.24 50.43

2008-2009 1,61,317.74 2901.51 55.59

2009-2010 2,20,408.93 2,887.28 76.33

Graph Showing:



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Interpretation:

The ratio was in increasing trend.

During the year 2006-2007 the ratio was recorded at 31.2 and in the 2011-2012 the ratio wasincreasing to 76.33.

The highest ratio was recorded at 76.33 in the year 2011-2012 which is more than the average ratio.

The lowest ratio was 31.2, which is lesser than the average ratio.

Fixed Assets Turnover Ratio:

The Fixed Assets turnover ratio is the relat

zuwari cement

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